WTO allows China to impose tariffs on USD645 million of U.S. imports

The WTO ruled that China can retaliate against USD645 million in annual goods trade with the U.S. over Washington's anti-subsidy tariffs on Chinese goods. The outcome of this case is of great significance for addressing the U.S.' illegal countervailing practices against China, safeguarding the legitimate trade interests of Chinese enterprises and defending the multilateral trading system, China's Ministry of Commerce (MOFCOM) said in a statement. In 2012, China filed a complaint at the WTO challenging the countervailing duties imposed by the U.S. between 2008 and 2012 on 22 Chinese products, ranging from solar panels to steel wire. The dispute has been under review for nearly a decade. A WTO arbitrator last week issued a ruling on China's countervailing measures against the U.S., holding that China may request authorization from the WTO's Dispute Settlement Body to suspend concessions or other obligations at a level not exceeding USD645 million per annum against the U.S.

It is the second time that China has been granted a favorable ruling by the WTO concerning trade retaliation against the U.S. Previously, China was granted USD3.579 billion in annual trade retaliation against the U.S. in a WTO dispute over anti-dumping measures. Chinese analysts said that the latest ruling fully showed that the WTO has recognized the market economy status of China and its state-owned enterprises (SOEs), and it is expected that the success rate of appeals of SOEs in international trade will be significantly improved in the future. The WTO panel found that the U.S. Department of Commerce acted inconsistently with WTO rules because it determined that certain Chinese SOEs were “public bodies” based solely on the grounds that they were majority owned, or otherwise controlled, by the government of China. Analysts also said that China's goal is not to raise tariffs but to push the U.S. to lower them.

The WTO ruling also piles up pressure on U.S. President Biden to remove tariffs on Chinese products imposed by his predecessor Donald Trump, which have already been determined to be illegal by the WTO and are causing headaches for the U.S. economy. A WTO appellate body judge ruled in October 2020 that additional tariffs imposed by Trump on USD200 billion worth of Chinese products violated international rules, but President Biden has not removed the tariffs. “Wednesday's ruling was different from the additional tariffs imposed on $200 billion worth of Chinese products in the Trump era,” Hu Qimu, Chief Research Fellow at the Sinosteel Economic Research Institute, told the Global Times, noting that the Trump-era tariffs are mixed up with political factors. “China's manufacturing industry is not afraid of U.S. tariffs, because U.S. consumers paid and will pay for the tariffs imposed on Chinese goods, contributing to today's inflation in the U.S. and even affecting current U.S. monetary policy,” Hu said, as reported by the Global Times.